Intel prepares to launch new set-top box and streaming TV service, but will the TV industry finally play ball?

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Intel, according to pre-CES scuttlebutt, is preparing to announce a new set-top box (STB) at CES this year. If true, it’ll be Intel’s third time at bat on this concept: The company previously partnered with Yahoo in 2008 to launch an internet widget channel, and with Google in 2010 to produce the first generation of Google TV products. The Google TV options did, at least, come to market, but went largely nowhere thereafter. Some of the blame for that rests on Google TV itself — but not all of it. If Intel is serious about taking on the STB business, it’s going to have to contend with powerful foes that are directly opposed to new methods of distribution.

Entrenched interests

One of the most fundamental problems facing Intel and the other companies attempting to work in this field is that their nature is diametrically opposed to that of their content partners. Companies like Intel (and to some extent Google, Netflix, and even Microsoft) create value by driving innovation in software and hardware design. Reduce power consumption, shrink form factors, or crunch data more effectively, and new device capabilities evolve. Unfortunately, the content creation industry views this process as a fundamental threat.

The content creation industry has proven categorically incapable of recognizing the tremendous revenue potential of emerging technology. This blind spot dates back to the invention of the phonograph and the subsequent battle over performance rights. Virtually every time a new medium or distribution method has been proposed, powerful industry lobbyists have opposed it. Artists earn money by creating works, but the content creation industry that supports them makes its cash by controlling the distribution of those works. Anything that threatens that control is, by definition, an enemy.

Understand that fact, and you understand why Jack Valenti once compared the advent of home video recording to the Boston Strangler. It’s why the RIAA and MPAA reacted with frothing rage when SOPA failed to pass. And it’s why Intel’s 2010 partnership with Google over Google TV was greeted with panic.

Google TV, to be blunt, wasn’t all that great — but judged by the reactions of NBC, ABC, CBS, Fox, Viacom, and Hulu, you’d think every single set-top box arrived with 10,000 hours of 1080p movies, a free HBO subscription, and the next three years of your favorite television shows. All these services slammed the door — hard — on Google TV. GTV devices were unable to access the web content of these portals, effectively killing the value proposition of the box. Specifically:

You could watch The Simpsons via your local Fox affiliate on the TV.

You could watch The Simpsons via Hulu on your computer.

You could connect an HDMI or DVI cable to your computer and watch The Simpsons on your television via Hulu on your computer.

But you couldn’t watch The Simpsons on your television using Google TV.

Why not? Control. Specifically, control of advertising revenue. If users flock to Google TV due to lower commercial counts, the business model of the industry collapses.

Intel, according to reports, has taken this on because it’s tired of others doing a half-assed Google TV and wants to get it right. Certainly on the hardware side, Intel is capable of doing so. Intel’s current Clover Trail has no trouble with 1080p playback and is easily capable of handling second-screen functionality or displaying supplemental content. Santa Clara’s recent work in low-power markets means it has a number of products that could fit inside a set-top box. Underlying hardware, we suspect, is less important than what Intel bakes into the operating system and content distribution agreements.

And make no mistake, the latter is key. A Google TV that can’t access web content from broadcasters, ultimately, is a boondoggle. It marginally extends the capabilities of the television set, but not in a way that a smartphone, tablet, or laptop doesn’t already cover. Given these particulars and the growth of second-screen viewing, it would almost make more sense for Intel to launch a sort-of specialized tablet with WiDi and a set-top box interface point as a way of offering second-screen content.

Either way, the biggest problem isn’t going to be building a decent set-top box on existing Intel technology, but rather delivering content to the end-user. Reports here point to a sort-of a la carte approach, with users able to subscribe to the channels that most interest them rather than paying for an entire swath of channels they never watch. Such a move would put Intel in direct competition with cutthroat cable operators in long-established markets, after said operators have demonstrated singular unwillingness to play nice with internet TV devices.

And therein lies the final wrinkle. Set-top boxes, with their staid feature sets and lowest-common-denominator focus, aren’t an area where Intel would typically be interested in focusing. They are, virtually by definition, low-margin and invisible. Tivo and other DVRs may have bucked this trend slightly, but no one upgrades an STB on a yearly basis. It’s a bit of a puzzle why Intel would launch itself into this market to begin with — and since Chipzilla knows that, there’s a decent chance something genuinely interesting is in the works.

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Thats great, but who would produce shows? A show or two here and there, produced by Netflix or Amazon, don’t a full spectrum of entertainment make. What should go is making me buy sixty channels I never watch, just to get the seven or eight that I do.

Ben

And here-in lies the biggest problem of all. Laziness. If people would actually take the time to learn how to set up a media enter PC, there wouldn’t really be a market for this kind of crap. Not to mention that media center PCs are ridiculously easy to set up, especially with all the awesome software we have now, between linux and windows media center.

Joel Detrow

If/when the RIAA, MPAA, and cable companies balk at their “internet TV device” I’d love it if they released a statement that basically says, “F–k you, we’re Intel.” It would fit.

Joel Detrow

If/when the RIAA, MPAA, and cable companies balk at their “internet TV device” I’d love it if they released a statement that basically says, “F–k you, we’re Intel.” It would fit.

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